Credit & Debt
After the coldest winter in decades, my house was worse for wear. The frigid temperatures caused my flagstone front porch steps to crumble and my retaining wall to collapse. While a lot of homeowners would have paid for the renovations by adding them to their mortgage, I was able to pay without going into debt.
Establishing an emergency fund
I love my debit card – everything about it. Between the comfort it provides me to its ability of keeping my spending in check, there is nothing not to love. As I entered the real world, however, I was confronted with both a devastating and terrifying truth: I needed to get a credit card. Even though I knew this day would come, I still had many suspicious about this new, unknown card.
Knowing the components that make up a credit score is one thing but actually understanding the specific activities that impact each component is the only way you'll improve your score.
Payment history: 35%
In an era of student loans and continued recession, debt can seem like a fact of modern life.
While many struggle to manage it, I made a different choice. Lack of debt has been my ticket to make career, family, and lifestyle decisions without taking loans, including launching my own business.
I have over $40,000 in college debt. But that's going to change in 2014. I'm going to pay $6,000 of it down. No excuses. No pretending. But by the end of 2014, My debt will be smaller. Here's how I plan on making it work.
Playing with my paycheck
Six months after college graduation, I got an email reminder for a bill – student loans! At that time (June, 2012), repaying those consumed my financial life. However, as I watched house prices in my hometown fall and interest rates dip to as low as 2.8% for a 15-year fixed mortgage in July, 2012, that would all change. I knew I had something else to work for.
I handle my finances with an "out of sight, out of mind" mantra – basically the opposite of how we're taught. If I overspend during the weekend, I wait as long as possible to check my balance the following week. If I receive an unexpected bill, it immediately goes into the "I'll do it later" pile. Fortunately, however, I always end up getting it done.
It’s a common question that people with credit cards and other forms of debt ask themselves: “How much is too much?” This is an important question to ask yourself before you let yourself get in over your head.
Graduating from law school and business school in the aftermath of the Great Recession and a particularly weak legal employment market meant that I had as much debt as a first-time home-owner and little to no steady income. As I looked for permanent work with little success, the first of my daunting, monthly debt payments loomed large in my mind. Not only was there no way for me to realistically make the mortgage-sized debt payments each month, but throwing in the towel was not an option.
My husband and I worked diligently to pay down our debt, ensure our credit scores were favorable, and have a chunk of cash saved in the bank. At the time, we were renting and found that we were quickly outgrowing our small, two-bedroom house. We searched for a new house to rent and realized that the renters' market in our area greatly favored the renter rather than the tenant. Prices were outrageous.